I think we just have to DO this BK thing!!

[Frogge]

Briefly as I can, Here's the deal: House in TN (old home), house in KS (current home), $70,000 and rising CC debt. Insolvent. The TN house has been on market for 10 months and we are upside down about $25-30K. We are officially drowning.

Our very skilled attorney is going to try and avoid bk by getting us off the hook with the 1st (Countrywide) and 2nd (Regions) on the TN house because the broker did a NINJA loan, but put fraudulent info on the apps to get it done. The idea of course is to negotiate with them to take the house, hash it out among them and insist -no negative bureau reporting. We are not late (yet) on these payments, nor on anything else. Scores are upper 700's, we don't have one CC rate over 7% at the moment.

This idea sounds GREAT, but then I still have the CC debt. We can struggle through it for a few months, but I just see a domino effect occuring with the CC companies if our scores do drop at all. And I think we'll have more debt when it's all said and done just making ends meet-- then I'm worried we'd end up filing anyway and by that time be hard pressed to get anything discharged.

DH and I have steady jobs (family of 5), but if you don't count his varying overtime we are in the negative on the means test if I'm calculating right. If they count overtime, we could probably end up with Ch13.

I feel like I should tell the atty. that we just want to file? He's not seen our FS yet. or maybe wait to see what happens with the mortgages? --thanks for any advice! I'm stressing!

[AngelinaCat]

Does the overtime appear on his regular paycheck, or is it a separate check?

The reason I am concerned about the overtime is that if it is included in regular income, and then all of a sudden the company, in a cost-cutting move, announces: "Okay, from here on out, no more Overtime", then you have all of a sudden taken a huge pay cut. If it can be put in some other category, that might help.

There are others here that are alot more knowledgable than I am, and I am sure you will hear soon from them. The important thing is that we're all here to help. Try not to stress too much.

[epiphany]

You are wise to be thinking so pro-actively. I wish I could have anticipated the demise of my house of cards.

From what you describe, it sounds like BK may indeed be your best option.

Is your lawyer a bankruptcy attorney? You say he hasn't seen your FS? Sorry, don't know what that is? Have you seen more than one attorney? I would get second and third opinions asap. Many attornies will give you a free consult so it doesn't hurt to shop around.

It just doesn't sound right that he hasn't gone over the bankruptcy options with you, other than to avoid it.


ep

[Frogge]

Does the overtime appear on his regular paycheck, or is it a separate check?

The reason I am concerned about the overtime is that if it is included in regular income, and then all of a sudden the company, in a cost-cutting move, announces: "Okay, from here on out, no more Overtime", then you have all of a sudden taken a huge pay cut. If it can be put in some other category, that might help.

That's EXACTLY the problem, they are saying overtime will be cut back soon, and already has quite a bit, so I'm worried about this roller-coaster income.. does he NOT work overtime that's offered in anticipation of a look-back, or work all he can so we can keep up the bills? I know I'm driving DH (and myself!) crazy.. I think I really just need to lay all this out to the atty.

Thanks so much for your input on this!!

[Frogge]

Is your lawyer a bankruptcy attorney? You say he hasn't seen your FS? Sorry, don't know what that is? Have you seen more than one attorney?

ep, He IS a bankruptcy atty, the best around, and the only reason I'm able to hire him (luckily) is that my boss is good friends with him and they work together on a lot of deals, so I won't be paying much for his services. "FS" is financial statement -- he's not seen the actual hole we're in yet, he's just been briefed on the situation so far. He's not an advocate of 'rushing into' bk when there could be other options. I'm just not sure there are many for us!

Thanks for your input!

[epiphany]

ep, He IS a bankruptcy atty, the best around, and the only reason I'm able to hire him (luckily) is that my boss is good friends with him and they work together on a lot of deals, so I won't be paying much for his services. "FS" is financial statement -- he's not seen the actual hole we're in yet, he's just been briefed on the situation so far. He's not an advocate of 'rushing into' bk when there could be other options. I'm just not sure there are many for us!

Thanks for your input!

Okay, I pick up what you're putting down. You trust him and that's cool. But I have to wonder why an experienced BK attorney who is the best in town is suggesting anything without seeing your FS (thanks for defining that).
If he has not seen the "hole", how can he suggest the best way out of it?

Not trying to burst your bubble but...

I had an accountant for 6 years who was a friend of my best friend for ...now I am being audited by the IRS for 2005 which he did and 2006 (which I did myself but imitated what he did). I was charged a cheap rate.

I'm just sayin'..........

Best of luck to you,

ep

[justplaintired]

Sounds like you're being wise about the BK. Not sure how your attorney could make a decision on whether you should file or not without looking at your FS. Let him/her she that and then he can better make the call. Drowning in debt is scary, filing BK is scary, but atleast once the BK's behind you, when they cut O/T, like they have us quite a few times over the last few years, it's not quite as scary.

Good Luck!

[lcphglc]

BK looks at your income from the past six months, if you have been getting overtime then it will count towards your income. If the o/t is going to stop, you either need to wait for several months after its end to calculate a lower monthly average or you need to anticipate going to ch 13 and trust your atny to make a solid plan of repayment that will help you over the next five yrs. Good luck

* I am not an attorney and this is not legal advice; please ask an attorney in your area of residency

[Frogge]

BK looks at your income from the past six months, if you have been getting overtime then it will count towards your income. If the o/t is going to stop, you either need to wait for several months after its end to calculate a lower monthly average or you need to anticipate going to ch 13 and trust your atny to make a solid plan of repayment that will help you over the next five yrs.

That's what I was wondering.. How in the world can creditors /court just expect that you will have overtime like you did before? It seems it should be based on BASE pay, not o/t. DH will feel like he has to work his tail off all the time then, forever. It seems unbelievable. Don't get me wrong, we dug our own hole, I just wish I wasn't in it (as I'm sure you all are .

[Flamingo]

An old rule of thumb is that if you can get yourself out of debt in five years, do not file. That means cutting up all cards, not using them, and paying down bills to avoid filing. Of course there has to be secure income during that time in order to be able to do so. If you feel there will be a change of income coming shortly and no way to pay down the debt, by all means investigate your options. Everyone's situation is different; some people try to hold off not filing when they should have filed immediately. Some people have to wait to file due to circumstances like yours to qualify to file. You need to get the best legal advice you can and put it all on paper and see what will work for you. Chapter 13 is not a cakewalk but it puts you in a position when your Plan is completed to recover and get a fresh start although it will be on your credit reports for 7 years. If you go into filing a Chapter 13 with good credit (as you apparently still now have) and keep all payments on time as to your Plan and other bills, it works to your benefit at the end.

[Frogge]

I had an accountant for 6 years who was a friend of my best friend for ...now I am being audited by the IRS for 2005 which he did and 2006 (which I did myself but imitated what he did). I was charged a cheap rate.

ep, I feel you. Believe me, we trusted "friends of friends" way too many times, that's how we ended up with the stupid loan fiasco on that TN house.. someone 'trusted' by FAMILY.. and shady as a summer oak. I'm sure everyone has a "if I'd only.." story.. this one's classic. We don't even talk to those family members anymore.

This attorney knows his stuff, I'm sure of that, I just need to be very upfront with him and give him all the info he needs to make the call. There's just a lot of wierd variables in our situation and it makes me nervous to think I might be choosing the wrong path, you know what I mean?

[Frogge]

Thanks for that info, Flamingo. I know we will work this out somehow, it's just the 'getting there'.. the unknown. I am so glad I can hear other stories and encouraging words!

[AngelinaCatHub]

Hey Ms. Frogge:

Highlight mark all the O.T. time on stubs. Ask them to discount that as firm income. Attempt to dump the TN house even at a breakeven. Any monies NOW put into excempt stuff you will use in future. (DON’T STORE GASOLINE), Food, blankets, stuff like that, soap, linins and stuff you use everyday but wears out. BE CAREFUL and not pay favorites. I think we are in trouble about that one ourselves with a 2004 inquiry. Anyway, put your current savings to good use that will be forgiven by any Trustee. Get the Chapter 7 book from Nolo. $17 download pdf if you have a ream of paper to print it or read it on the screen. ‘Hub

[Frogge]

Thanks Hub those are great suggestions. I wondered about the savings because we have about $4000 now from tax refund (another worry) and I thought we should maybe pay most toward the cards we want to try and keep out of the bk.. but what I'm understanding from you, that's a bad idea. I am just holding it in there for now and transferring little by little.

[Frogge]

Attorney has all my financial info now

OK, I forwarded our financial statement, credit card information and monthly income & expenses to my attorney this morning so he has all the cards. It will probably be Monday before he can get back with me, so... now to make it through the weekend without panicking!!